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TikTok-owner ByteDance plans to spend greater than $12bn on synthetic intelligence infrastructure this 12 months, betting on the cutting-edge know-how for brand spanking new progress whereas beneath stress from Washington to promote its common video-sharing app within the US.
The Beijing-based firm has budgeted Rmb40bn ($5.5bn) to accumulate AI chips in China in 2025, in line with two individuals acquainted with the plans, which might double the quantity it spent final 12 months. The group additionally plans to speculate about $6.8bn abroad to beef up its basis mannequin coaching capabilities utilizing superior Nvidia chips.
About 60 per cent of ByteDance’s home semiconductor orders would go to Chinese language suppliers corresponding to Huawei and Cambricon, whereas the remainder can be spent on Nvidia chips which were watered all the way down to align with US export controls, in line with the individuals.
Beijing has given Chinese language tech corporations casual steering to purchase a minimum of 30 per cent of their chips from the nation’s personal suppliers, the individuals added.
The $6.8bn in abroad funding was budgeted to construct out ByteDance’s AI computing capability for mannequin coaching. This funding might face challenges from just lately expanded US export controls designed to hamper Chinese language corporations constructing delicate applied sciences.
The push comes as ByteDance faces stress in its core social media enterprise. TikTok restored service to 170mn US customers on Sunday after the nation’s incoming President Donald Trump vowed that corporations that distributed and hosted the platform wouldn’t be held responsible for violating a US legislation that banned the video app except it was bought.
Whereas Trump signed an govt order on Monday to maintain TikTok open for 75 days, he stated he needed a US firm to have 50 per cent possession in TikTok sooner or later. Trump stated he might “actually” put tariffs on China if it rejected a deal.
Any such transaction might have an effect on plans for a future ByteDance preliminary public providing, with the corporate valuing itself at $300bn throughout a current share buyback programme.
The corporate drew up its large buying finances for graphic processing models in 2025 earlier than the current interventions within the US.
ByteDance, which beneath the route of the tech group’s founder Zhang Yiming has turn out to be the frontrunner in China’s AI race, is doubling all the way down to construct out its personal AI infrastructure to coach its basis mannequin, in addition to to implement AI features throughout its numerous platforms.
It has ramped up computing capability in south-east Asia, notably in Malaysia. Although Chinese language corporations have been banned from buying Nvidia chips outdoors of the US since 2023, they’ve been in a position to safe entry to chips by way of rental agreements with third-party knowledge centre suppliers, a number of trade insiders stated.
This loophole was closed final week by the outgoing Biden administration, which issued new guidelines that the identification of each the proprietor and operator of the chips should endure a evaluation course of.
Whereas Trump might take a distinct stance on export controls, the laws — if strictly applied — would make ByteDance’s chip purchases abroad harder than ever.
It has already made giant orders to construct up abroad AI capability this 12 months, corresponding to by way of rental agreements, in line with one of many individuals. It ought to be ample for a lot of the firm’s wants in 2025 however what occurred after that remained unsure, the individual added.
ByteDance’s finances for purchases of AI chips abroad was beforehand reported by information outlet The Data. In response to the FT’s reporting, ByteDance stated: “The anonymously sourced details about our plan is wrong.”
ByteDance additionally faces challenges from deep-pocketed native rivals, corresponding to Baidu, Alibaba and Tencent, that are investing closely in generative AI. Alongside these rivals, it has been pushing out extra succesful fashions and decreasing prices for builders.
Chinese language corporations nonetheless have to construct up the capability of AI knowledge centres onshore to assist the usage of AI purposes even after the fashions have been skilled.
ByteDance plans to make use of most of its Chinese language AI chips — together with Huawei’s Ascend and Cambricon — for “inference” duties, the computation undertaken by giant language fashions to generate a response to a immediate.
ByteDance launched its AI chatbot Doubao in August 2023 and the AI app has turn out to be China’s hottest AI software, in line with web site analytics web site Aicpb.com.
Doubao, which suggests “beanbag” in Chinese language, had 71mn common month-to-month energetic customers as of December, in contrast with OpenAI’s 300mn weekly energetic customers globally.
Nvidia recorded $11.6bn in income from China, together with Hong Kong, or about 13 per cent of its international complete, throughout the first three quarters of 2024, in line with firm filings.
ByteDance is by far the biggest consumer for Nvidia in China. The TikTok mother or father can solely purchase much less superior chips corresponding to Nvidia’s H20 for Chinese language knowledge centres, a specialised and less-powerful model of its GPUs tailor-made to align with US export controls.
In 2024, it ordered about 230,000 of Nvidia’s chips, principally H20s, in line with estimates from tech consultancy Omdia. This compares with 485,000 of the extra superior “Hopper” chips purchased by Microsoft final 12 months and the 224,000 acquired by Meta.
Tech corporations around the globe have spent an estimated $229bn on servers in 2024, in line with Omdia, led by Microsoft’s $31bn in capital expenditure and Amazon’s $26bn.
Further reporting by Ryan McMorrow in Beijing and Demetri Sevastopulo in Washington
